Aurora’s latest play – the West Black Lake Project – has the potential to host about 600 billion cubic feet (bcf) of gas and development drilling will start early this year, the company said.
“West Black Lake is a low risk development project in the prolific Texas onshore Gulf Coast, Cretaceous age back-reef play, with the potential to add very significantly to the production and reserves base of the company,” executive chairman Jon Stewart said.
3D and 2D seismic, calibrated against well data at an adjacent large gas field, have identified extensive porous zones at West Black Lake, according to Stewart.
“The first West Black Lake well drilled, discovered gas and confirmed the porous zone defined from seismic processing,” he said.
“The successful initial development of West Black Lake, commencing early in 2006, would generate early cash flow in what is currently a strong domestic gas market with historically high gas prices. Subject to rig availability, an active development program through 2006 should see a rapid increase in production to about 15 million cubic feet per day from West Black Lake.”
US gas prices continue to be very strong with the Henry Hub Gas price currently above US$13 per thousand standard cubic feet.
Aurora will have the opportunity to earn a 20.15% interest in five wells (15.1125% net revenue interest) through funding a 40.3 % interest in each well until individual well payback.
Operator’s Texas Crude Energy's estimate of potential recoverable reserves from the initial five development wells is roughly 30bcf.
Following the initial five-well development drilling program, Aurora has the option to acquire a 10% working interest in the balance of the project for the payment of US$1 million and can participate on a 1:1 basis thereafter in respect of that interest. (Aurora would maintain its 20.15% interest in the initial five wells).
Assuming successful definition of an approximately 600bcf field, peak field production could reach about 160 million cubic feet per day.
Aurora is acquiring the right to participate in an initial five wells and the option over the 10% interest in the full project from Texas Crude Energy Inc (TCEI) who will operate the project.
“Aurora has a good working relationship with TCEI which operates Aurora’s Flour Bluff Gas Field and will operate the drilling of the large Sugarloaf exploration prospect, also in Texas,” Stewart said.
“We are excited about the potential for West Black Lake to be a significant and long term producing asset of the Company. 2006 is set to be a very active year for Aurora with 10 development wells scheduled to be drilled at Flour Bluff and West Black Lake and a major exploration well at Sugarloaf.”
The first West Black Lake well has a proposed Total Depth of approximately 4,200 m (14,000 feet) and Aurora’s share of costs is estimated to be approximately US$1.2 million completed for production.
The first well is anticipated to be spudded by March 2006, subject to rig availability.
In addition, Aurora will contribute about US$700,000 towards new 3D seismic studies to be undertaken and the construction of a short pipeline. The company said it had sufficient funds to meet its obligations under this agreement.
